1995 - 1996 LEGISLATURE
September 12, 1995 - Introduced by Representatives Ott, Ainsworth, F. Lasee,
Ward, Harsdorf, Baldus, Wilder, Green, Freese, Hahn, Olsen, Gard, Albers,
Hutchison, Kreibich, Gunderson, Dobyns, Musser, Seratti, Plombon
and
Ladwig, cosponsored by Senators Fitzgerald, Schultz, Breske, Rude,
Clausing
and Decker. Referred to Committee on Agriculture.
AB556,1,4 1An Act to amend 234.265 (2), 234.68 (3) (b), 234.69 (3) (b), 234.87 (5) (b) and (c),
2234.90 (4) (b) 1. and 600.01 (1) (b) 8.; and to create 234.91, 234.93 (1) (d) and
3234.93 (3g) of the statutes; relating to: a loan guarantee program for the
4acquisition or improvement of farm assets.
Analysis by the Legislative Reference Bureau
Under current law, the Wisconsin Housing and Economic Development
Authority (WHEDA) guarantees collection of loans from the Wisconsin development
reserve fund (fund) for the recycling, stratospheric ozone protection, clean air, small
business, business improvement, targeted development, nonpoint source pollution
abatement and agricultural chemical cleanup, agricultural production, agricultural
production drought assistance, agricultural development and cultural and
architectural landmark loan guarantee programs. This bill creates a farm assets
reinvestment management loan guarantee program.
The bill authorizes WHEDA to guarantee collection from the fund of a portion
of the principal of an eligible loan made to an eligible borrower by a participating
private lender. For any eligible loan, the principal amount that WHEDA may
guarantee may not exceed the borrower's net worth or 25% of the loan principal,
whichever is less. An eligible borrower is a farmer who is currently operating farm
premises and whose debts do not exceed 85% of the farmer's assets. An eligible loan
is one for the acquisition of agricultural assets, defined as machinery, equipment,
facilities, land or livestock, or for the cost of improvements to facilities or land. The
agricultural assets must be purchased, and the improvements must be made, for
agricultural purposes. The total outstanding guaranteed principal amount of all
loans to an individual borrower that WHEDA may guarantee under the program
may not exceed $100,000, or $50,000 if any of the loans is affected by any other state
or federal credit assistance program. The bill specifies that WHEDA must charge

an annual service fee for each loan guarantee, to be deposited in the fund to back up
loan guarantees under the program. The amount of the fee is based on the
outstanding guaranteed principal amount. The bill also limits the term of a
guarantee to 5 years if the loan is for the acquisition of machinery, equipment or
livestock or for improvements to facilities or land. The term may not exceed 10 years
if the loan is for the acquisition of facilities or land.
The total outstanding guaranteed principal amount of all loans that WHEDA
may guarantee under the program may not exceed $10,000,000. The bill reduces the
total outstanding principal amount of all loans that WHEDA may guarantee under
the agricultural production loan guarantee program (CROP) from $30,000,000 to
$20,000,000. Additionally, the bill provides that, if there is a difference between the
amount actually guaranteed and the maximum amount that WHEDA may
guarantee under the stratospheric ozone protection loan guarantee program, the
clean air loan guarantee program or the nonpoint source pollution abatement and
agricultural chemical cleanup loan guarantee program, WHEDA may increase the
amount that it guarantees under the new program by the amount of any such
differences. The amount that WHEDA may guarantee under any of the specified
programs must then be reduced by the amount by which the total guaranteed
principal amount under the new program was increased on account of the difference
under the specified program between its guarantee limit and the amount actually
guaranteed.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB556, s. 1 1Section 1. 234.265 (2) of the statutes is amended to read:
AB556,2,92 234.265 (2) Records or portions of records consisting of personal or financial
3information provided by a person seeking a grant or loan under s. 234.08, 234.49,
4234.59, 234.65, 234.67, 234.68, 234.69, 234.70, 234.765, 234.82, 234.83, 234.87,
5234.90, 234.905 or, 234.907 or 234.91, seeking a loan under ss. 234.621 to 234.626,
6seeking financial assistance under s. 234.66 or under ss. 234.75 to 234.802, seeking
7investment of funds under s. 234.03 (18m) or in which the authority has invested
8funds under s. 234.03 (18m), unless the person consents to disclosure of the
9information.
AB556, s. 2 10Section 2. 234.68 (3) (b) of the statutes is amended to read:
AB556,3,2
1234.68 (3) (b) Except as provided in s. 234.93 (3) and (3g), the total outstanding
2principal amount of all guaranteed loans under par. (a) may not exceed $500,000.
AB556, s. 3 3Section 3. 234.69 (3) (b) of the statutes is amended to read:
AB556,3,54 234.69 (3) (b) Except as provided in s. 234.93 (3) and (3g), the total outstanding
5principal amount of all guaranteed loans under par. (a) may not exceed $1,000,000.
AB556, s. 4 6Section 4. 234.87 (5) (b) and (c) of the statutes are amended to read:
AB556,3,97 234.87 (5) (b) Except as provided in s. 234.93 (3) and (3g), the total guaranteed
8principal amount of all loans for the installation of best management practices that
9the authority may guarantee under par. (a) may not exceed $850,000.
AB556,3,1310 (c) Except as provided in s. 234.93 (3) and (3g), the total guaranteed principal
11amount of all loans for the taking of corrective action in response to the discharge of
12an agricultural chemical that the authority may guarantee under par. (a) may not
13exceed $650,000.
AB556, s. 5 14Section 5. 234.90 (4) (b) 1. of the statutes is amended to read:
AB556,3,1715 234.90 (4) (b) 1. Except as provided in subd. 2., the total outstanding principal
16amount of all loans which the authority may guarantee under par. (a) may not exceed
17$30,000,000 $20,000,000.
AB556, s. 6 18Section 6. 234.91 of the statutes is created to read:
AB556,3,20 19234.91 Farm assets reinvestment management loan guarantee
20program.
(1) Definitions. In this section:
AB556,3,2221 (a) "Agricultural assets" means machinery, equipment, facilities, land or
22livestock.
AB556,3,2423 (b) "Farm credit service" includes a production credit association, federal land
24credit association and agricultural credit association.
AB556,3,2525 (c) "Farmer" has the meaning given in s. 102.04 (3).
AB556,4,1
1(d) "Farm premises" has the meaning given in s. 102.04 (3).
AB556,4,62 (e) "Participating lender" means a bank, farm credit service, credit union,
3savings bank, savings and loan association or other person who makes loans for the
4acquisition or improvement of agricultural assets and who has entered into an
5agreement with the authority under s. 234.93 (2) (a). The term does not include a
6seller under a land contract.
AB556,4,9 7(2) Eligible loans. A loan made by a participating lender is eligible for
8guarantee of collection from the Wisconsin development reserve fund under s. 234.93
9if all of the following apply:
AB556,4,1010 (a) The borrower is a farmer who is eligible for a guarantee under sub. (3).
AB556,4,1311 (b) The loan is made to finance the acquisition of agricultural assets or the cost
12of improvements to facilities or land. The agricultural assets must be acquired, and
13the improvements must be made, for agricultural purposes.
AB556,4,1614 (c) The total outstanding guaranteed principal amount of all loans made to the
15borrower that are guaranteed under this section will not exceed $100,000, or $50,000
16if any of the loans is affected by any other state or federal credit assistance program.
AB556,4,1817 (d) The rate of interest and the loan terms, including any associated fees or
18charges, are approved by the authority.
AB556,4,2019 (e) The participating lender obtains a security interest in agricultural assets
20acquired or improvements made with the proceeds of the loan.
AB556,4,2221 (f) The proceeds of the loan are not applied to the outstanding balance of any
22other loan or forbearance.
AB556,4,24 23(3) Eligible farmers. A farmer is eligible for a guarantee of a loan under this
24section if all of the following apply at the time the loan is made:
AB556,4,2525 (a) The farmer is currently operating farm premises.
AB556,5,3
1(b) The amount of the farmer's debts, including the loan, does not exceed 85%
2of the farmer's assets, including the value of the agricultural assets to be acquired,
3or the improvements to be made, with the proceeds of the loan.
AB556,5,64 (c) The participating lender considers the farmer's assets, cash flow and
5managerial ability sufficient to preclude voluntary or involuntary liquidation during
6the term of the loan.
AB556,5,16 7(4) Service fees and payment proration. (a) The authority shall charge an
8annual service fee on every loan guarantee under this section. The fee shall be 1%
9of a loan's outstanding guaranteed principal not exceeding $50,000 plus 1.5% of a
10loan's outstanding guaranteed principal exceeding $50,000. The fee shall be
11calculated and charged when the loan is made and on each anniversary date of the
12loan's inception during the term of the guarantee. The participating lender shall
13collect the fee as part of the interest charged on the loan and transmit the proceeds
14to the authority. The authority shall deposit all fees received under this paragraph
15in the Wisconsin development reserve fund to be used to guarantee loans under this
16section.
AB556,5,2117 (b) In applying principal payments to the outstanding loan balance, the
18participating lender shall prorate the payments between that portion of the
19outstanding loan principal that is guaranteed under this section and the remainder
20of the outstanding principal balance to reduce the liability of the authority over the
21term of the guarantee.
AB556,6,2 22(5) Guarantee of collection. (a) Subject to par. (c), the authority shall
23guarantee collection of a portion of the principal of a loan eligible for a guarantee
24under sub. (2). The principal amount of an eligible loan that the authority may

1guarantee may not exceed the borrower's net worth or 25% of the total loan amount,
2whichever is less, calculated at the time the loan is made.
AB556,6,63 (b) The term of a loan guarantee for a loan made to finance the acquisition of
4machinery, equipment or livestock, or the cost of improvements to facilities or land,
5may not exceed 5 years. The term of a loan guarantee for a loan made to finance the
6acquisition of facilities or land may not exceed 10 years.
AB556,6,97 (c) Except as provided in s. 234.93 (3) and (3g), the total outstanding
8guaranteed principal amount of all loans that the authority may guarantee under
9par. (a) may not exceed $10,000,000.
AB556, s. 7 10Section 7. 234.93 (1) (d) of the statutes is created to read:
AB556,6,1211 234.93 (1) (d) To be used for guaranteeing loans under s. 234.91, fees collected
12under s. 234.91 (4) (a).
AB556, s. 8 13Section 8. 234.93 (3g) of the statutes is created to read:
AB556,6,1914 234.93 (3g) Increases and decreases in certain loan guarantees. (a)
15Notwithstanding sub. (3), if the authority receives applications for guarantees under
16s. 234.91 that would, if approved, result in guarantees under that section of
17outstanding guaranteed principal in excess of $10,000,000, the authority may
18guarantee a total outstanding guaranteed principal amount under s. 234.91 that
19exceeds $10,000,000 if any of the following applies:
AB556,6,2120 1. The total outstanding principal amount of all loans guaranteed under s.
21234.68 is less than $500,000.
AB556,6,2322 2. The total outstanding principal amount of all loans guaranteed under s.
23234.69 is less than $1,000,000.
AB556,6,2524 3. The total guaranteed principal amount of all loans for the installation of best
25management practices guaranteed under s. 234.87 is less than $850,000.
AB556,7,3
14. The total guaranteed principal amount of all loans for the taking of corrective
2action in response to the discharge of an agricultural chemical guaranteed under s.
3234.87 is less than $650,000.
AB556,7,64 (b) If par. (a) applies, the total outstanding guaranteed principal amount that
5the authority may guarantee under s. 234.91 may exceed $10,000,000 by any of the
6following:
AB556,7,87 1. The difference between the total outstanding principal amount of all loans
8guaranteed under s. 234.68 and $500,000.
AB556,7,109 2. The difference between the total outstanding principal amount of all loans
10guaranteed under s. 234.69 and $1,000,000.
AB556,7,1311 3. The difference between the total guaranteed principal amount of all loans
12for the installation of best management practices guaranteed under s. 234.87 and
13$850,000.
AB556,7,1614 4. The difference between the total guaranteed principal amount of all loans
15for the taking of corrective action in response to the discharge of an agricultural
16chemical guaranteed under s. 234.87 and $650,000.
AB556,7,1917 (c) If par. (a) applies and the authority guarantees a total outstanding
18guaranteed principal amount under s. 234.91 that exceeds $10,000,000, all of the
19following apply:
AB556,7,2320 1. The total outstanding principal amount of all loans that the authority may
21guarantee under s. 234.68 may not exceed $500,000 minus the amount by which the
22total outstanding guaranteed principal amount that is guaranteed under s. 234.91
23exceeds $10,000,000 as a result of the application of par. (b) 1.
AB556,8,224 2. The total outstanding principal amount of all loans that the authority may
25guarantee under s. 234.69 may not exceed $1,000,000 minus the amount by which

1the total outstanding guaranteed principal amount that is guaranteed under s.
2234.91 exceeds $10,000,000 as a result of the application of par. (b) 2.
AB556,8,73 3. The total guaranteed principal amount of all loans for the installation of best
4management practices that the authority may guarantee under s. 234.87 may not
5exceed $850,000 minus the amount by which the total outstanding guaranteed
6principal amount that is guaranteed under s. 234.91 exceeds $10,000,000 as a result
7of the application of par. (b) 3.
AB556,8,128 4. The total guaranteed principal amount of all loans for the taking of corrective
9action in response to the discharge of an agricultural chemical that the authority
10may guarantee under s. 234.87 may not exceed $650,000 minus the amount by which
11the total outstanding guaranteed principal amount that is guaranteed under s.
12234.91 exceeds $10,000,000 as a result of the application of par. (b) 4.
AB556, s. 9 13Section 9. 600.01 (1) (b) 8. of the statutes is amended to read:
AB556,8,1614 600.01 (1) (b) 8. Guarantees of the Wisconsin housing and economic
15development authority under ss. 234.67, 234.68, 234.69, 234.765, 234.82, 234.83,
16234.87, 234.90, 234.905 and, 234.907 and 234.91.
AB556, s. 10 17Section 10. Initial applicability.
AB556,8,19 18(1) This act first applies to loans for which application for guarantee is made
19on the effective date of this subsection.
AB556,8,2020 (End)
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